Bankruptcy vs. Consumer Proposal

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What are the pros and cons of filing for bankruptcy vs. Consumer Proposal in Canada?

By declaring bankruptcy, you’re protected from creditors and free from most of your debt, but there are disadvantages to consider as well. It can be confusing trying to decide between Bankruptcy vs. Consumer Proposal.

Many of our customers find alternative debt relief options to bankruptcy that they never considered before speaking with us.

In most cases, a Consumer Proposal is the best option, as it has more advantages than personal bankruptcy.

If your income increases after declaring bankruptcy, your monthly payment will also increase.

With a Consumer Proposal, your payments do not change.

Bankruptcy Advantages

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Stay of proceedings

Calls from collection agencies will STOP! Thanks to the Bankruptcy and Insolvency Act, wage garnishments and threats of lawsuits will also stop immediately.

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Cost effective

A personal bankruptcy in Ontario can costs less than other debt relief options. The exact cost depends on your income and assets.

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Quick process

At David Sklar, we’ll make every process easy for you, but personal bankruptcy is a particularly quick process. Many individuals can receive an automatic discharge within nine months.

Bankruptcy Disadvantages

Negative Impact to your credit score

Your credit report will show a record of your bankruptcy claim for six years after discharge and you will lose all of your credit cards.

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Loss of assets

When you file for personal bankruptcy, your licensed Insolvency Trustee will inform you of the assets can keep, and which you will lose. Your Trustee will calculate the value of the equity you have in your home, your investments, and other non-exempt assets, and distribute the proceeds to your creditors. During the bankruptcy period, any tax refunds you may receive will go to your creditors as well.

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Debts that can not be eliminated

Child support, alimony, fines, and some student loans are excluded. Secured debts (such as mortgages) are also not covered in a bankruptcy.

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Impact on employment

You must consider the fact that declaring bankruptcy may have an impact on your employment situation if you are responsible for money or trust funds. While bankrupt, you are not allowed to work as a director of a company.

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Surplus Income

Surplus income is any income earned above the standards set by the Office of the Superintendent of Bankruptcy Canada. You are required to pay half of any surplus income you earn above that amount.

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Added responsibilities

When you claim bankruptcy, you are required to make your regular payments which are based on your income. You must also attend two credit counselling sessions and send a monthly budget statement to your LIT.

Bankruptcy and surplus income payments

Each year the Superintendent of Bankruptcy outlines what they feel is a basic income for different family sizes. When declaring personal bankruptcy your income and size of your family impact the amount you will need to pay and for how long.

Getting into debt is easy. Getting out is a different story.

But it's still possible!

Did you know there is a Canadian debt relief program federally regulated by the Canadian Government, designed to help citizens avoid claiming bankruptcy? This amazing program can only be administered by a Licensed Insolvency Trustee (LIT).

If you’re struggling to make your payments every month and creditors won’t stop calling, we can help.

What our clients are saying.

Based on 965 reviews
Lisa Gomez
I had a great experience with Jerry Janiec and his team at David Sklar and associates. Within a week I was already accepted and filed for bankruptcy and in a few months I will be debt free! It feels like a lot of stress is off my shoulders. Jerry and his team are very friendly, helped me along the way and was there to explain every detail of the process with me. He gave my his card and is just an email/call away if I need any help with paperwork and completing my duties. He is a very patient and kind professional and I am so glad I chose him and this company to help me fix my financial problems. If you need help with a consumer proposal or bankruptcy (like I did) I highly recommend Jerry Janiec and David Sklar and associates!
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Richard Hong
Very professional and caring. Cori, explain everything and listened to my situation. If I didn't understand, she will explain it again. I'm glad that I went to David Sklar and Associates for my financial difficulties.
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Jay Mil
Great experience with this company . Especially Jennifer N. communication was amazing and really helped out my situation. Highly recommended her and David S .
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Trisha C
Everything went well. I will update in 5 years
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Angie
My experience with Cori was phenomenal. Cori took the time to explain the process thoroughly, listened to my concerns and reassured me. Cori has exceptional people skills and cares about the people she is helping. The experience throughout was professional, kind, warming and inviting.
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Dennis Armstrong
A huge thank you to Jackie S and to the David Sklar and Associates team. Steps made easy , Jackie S has been there during the entire process , whether it was through emails or phone calls . I felt acknowledged and respected . I’d recommend David Sklar and Associate at a heart beat !! Cheers , Dennis
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Kelley Roberts
Very happy to talk with grace and she explained my options.Grace is very knowledgeable,friendly,and helpful. She made feel very comfortable,with her help I am on the road to be debt free. She relieved so much stress. I highly recommend them.
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Nhie GU
David Sklar & associates is the place to be if you’re looking for help on your debt consolidation. Kudos on their staff Miss Grace Cuffaro who were very patient guiding me on complying all required documents.
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We are David Sklar

Our team of Licensed Insolvency Trustees in Ontario can help you get out of debt and in control of your own financial future. We’ve helped thousands of people and we can help you too. 

We know this is stressful, but you're not alone.

It’s going to be okay.
Book your free consultation today. We’ll do the rest.

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Call 1-844-962-9200 or fill out the form below. We’ll do the rest.

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